IRS has changed excess business and net operating losses

What is an excess business loss? To determine an excess business loss, you look to the extent that the total deductions from all trades or businesses exceed the total gross income and gains from those trades or businesses plus a certain amount depending on your filing status.

Any excess losses that are disallowed are treated as net operating loss carryforwards.

Net operating loss changes: You can’t carryback NOL’s anymore unless it’s certain farming losses and NOLs from insurance companies other than life insurance. This rule applies to NOLs after 2017. NOLs after 2017 can still be carried forward though.

Finally, losses arising after 12/31/17 are limited to 80% of taxable income.

There will be more detail on these changes as the months pass that will hopefully further clarify the changes.